tv Worldwide Exchange CNBC January 14, 2013 4:00am-6:00am EST
hello. this is today's "worldwide exchange." i'm ross westgate. >> and i'm kelly echs. these are your headlines from around the world. >> inflation is growing the india central bank prefer easing. the government steps in to contain home buying by foreigners in singapore. and a major overall, boosting operate aing profits by 25%. >> and it's merger monday. watch group by terry winston's division by $700 million, but u.p.s. walks away from its 5.2 billion offer for tnt express.
all righty. it's "worldwide exchange" here and we are back in the saddle. >> and it feels good. >> and george osborne is making some comments. he's basically saying that it's an interesting starting point and he plays down the prospects of there being a straight referendum on being an in/out referendum, part of the eu, not part of the eu, which is mixed from where most people think they are. >> some of the surveys show the people becoming more worried about it and we saw those comments, what's his face, labor leader over the weekend saying that he's walking out of the eurozone. so clearly, he finds that there's political gain to be made from -- >> and then you saw this british
train commerce survey, just 26% of them wanted to keep the status quo, right? >> i thought this was extraordinary. i was surprises how low it is. in this survey, when you ask businesses about how much in favor they are of keeping things the same, only 24%. >> 59% wanted a looser relationship with the eurozone. most people would say, we want to stay part of the eu, but we would like to have far less regulation, far less judgments than just have been contemplated from the european court. >> is britain going to be able to say that where they get rid of the regulation and teen the market and all that? >> that's the number one question. >> and we will explore it later on in the show. we will be heading out to india. we'll talk to hsbc's chief economist in the country to see whether or not a rate cut is in store. johnny corporations could be
ready to step up businesses in the uk. and the super bowl of retail conferences, we'll take a closer look at the sector with one top analyst out of new york. we'll also be in the car capital of the world. we'll head to detroit. is it still the car capital of the world? >> detroit likes to think so. >> well, first, though, one of the year's first big financial powwows is under way this week in hong kong. bernie lowe tells us most participants are looking to put last year behind them while hoping policymakers will get it right this year. >> one of the perennial features at hong kong's asian financial forum which groups together taupe leaders from government and business is the caliber of people that were here. we are joined by central bankers from europe, across asia, the americas, as well. and, really, if if there was one take away, sort of a catch
phrase, it was 2013 is pretty much going to be a year of fine tuning after 2012. it was a year that you never want to go through again. and central banker after central banker and policymaker after policymaker alluded again and again to what a delicate balance, more so now than ever it is in terms of how much government intervention is not quite enough or maybe just a little bit over the top. case in point, look at australia for the administration. for years has been virtually hell bent on balancing the federal budget. but the reality is the math doesn't work, they say, and wayne swan, the deputy prime minister and treasure for the federal government acknowledged the external factors meant that at a certain point at the end of last year, they had to backtrack or at least delay what they were thinking. >> what has occurred in the last six months has been a very big hit to revenue. that has been caused by global volatility. it is confidence, it is -- has had a very big impact on
possibilities and, of course, we've seen commodity prices absolutely crash. at the same time, at that time dollar was -- in terms of revenue, that's put a very big hole in our heavy knews, would it would be simply irresponsible to reform to that by cutting harder and endangering jobs. >> and joining us for more, regional economist at cmib. good to see you. thanks for joining us. what do you make of those comments you just heard? i think there's a recognition that the last three years has been extremely volatile as far as policymakers are concerned. i think what they've learned from that, they need to be a little bit more flexible, more responsible to the needs, because the condition can change very quickly. as a result, sticking on to, you know, policies with a gel of just sticking on to policy is sometimes not going to help the economy, you know, recover as
subsequently as well. i think that's what we've been seeing across the region as far as policies are concerned in that they are more responsive and more, i suppose, willing to adapt should be a quick change or shift in consumer sentiment because that will have an impact on growth very quickly in a subsequent month. >> seng wun, australia has had a difficult time determining just where their sector is heading in mining. is it simply now the onus is becoming more clear? >> well, yeah. i think the last six or eight months have given policymakers some degree of confidence in that the picture from europe is stable. the risk is fairly high, there will be more problems ahead, but the determination says policymakers in europe to stay on top of this situation, give confidence to policymaker here
and the u.s. is -- and, again, asia, china, it's anchoring growth here and policy is coming up on china is also towards some degree of small, stable growth rather than full speed ahead. so that gets everyone else a little bit more flexibility with regard to fiscal pol policy as well as monetary policy. i think the good thing is inflation and commodities and price are fairly stable through it all. it gives the policymakers a lot more room in terms of supporting the economy through the period for the most part of 2012. since pore property shares are taking a hit today. under new rules, foreigners buying property will have to pay a new tax and there is a tax on
those who speculation on industrial properties. seng wun, some people are pointing to what is happening with japan as inciting more capital inflows into places like singapore. do you expect more measures in response? >> i think the policymakers here in singapore, we have seen the hong kong government trying to attempt with limited success to hold on property prices here. we have seen inflows. if you look at the last few weeks, we are very strong close into the equity market and given that this region is still set to be likely to lead growth in the coming over 12 months or so itself, that's likely a gain to bring more money. unless, of course, we see a strong turn around in growth in europe and the u.s., but from the medium term itself, when you've got growth and you've got employment opportunity, you've got income growth and environment of very low interest
rate is headache to policymaker in which i think the government here continue to have to fine tunemakers every now and then essentially because after they tighten one time, they quiet down the market, but i comes back again because the liquidity flows remain strong. so whether this is the measures toned all measures remains to be seen, i think if the interest rate remains low, we may see further tightening after a period of quiet. i suppose contemplation, i think. >> stick right there. we also want to take a look at what is happening over in india. we're seeing mixed pictures on inflation. headline inflation slowed to its lowest level in three years, in fact. that was up about 7.2% from a year earlier and well shy of expectations. some say the lower than expected
wpi fueled the rate cut from india. does this mean 25 basis point rate cuts and more to come? >> well, there's firm pressure from the politicians on the central bankers to do so. the growth is still rather iffy. you've got inflation taking the turn for better. obviously, the central bank will say look, it's early days here. i think this is a gain of he who brings first politicians, they may still have a great to see at the end of the day. >> okay. we'll leave it at that. and just ahead on the program, we'll have more on india's inflation battle and what it means for interest rates. and we'll be joined there by hsbc's chief economist for india coming up in the next half hour. stay with us. meanwhile, we're just over an hour and 10 minutes into the trading day here in europe. this is where we stand, just weighted to the upside.
the dow joan stoxx 600 after a strong start that we've had to the year, we started this week with the ftse 100 flat. david cameron's comment about an eu referendum. it was going to be a speech about whether he would launch a referendum that may be delayed through the 23rd. the ibex up 30 points, xetra dax up 27 and the cac 40 up 13 points. we've got german bond auctions today. 1.54 spanish yield. 10-year yield in italy, 4.18% there. talking about announcing a new bond yield in italy, whether or not they could get that away. the japanese prime minister is
keeping the pressure on the bank of japan. we've been up to 89.67. euro/yen, up if you recall, 1119.34 is where we stand at the moment. euro/dollar, 11.335 55, holding on to the gains that we have seen on that particular cross rates. we have industrial production coming out in under an hour's time. that's where we trade right in and out in europe. let bring you the first update of the day from asia. li sixuan is out of singapore. >> hi. thank you, ross. asian markets mostly in the green today. and the outperformer is still china's shanghai composite hitting a seven-month high. this after security regulators said beijing can't miss the quota for investment markets.
if you recall, late last week, a top official tr china's signal said growth could come in at 7.7. surpassing beijing's target of 7.5%. sen second mainland stocks finished with .64%. over 15% after profit warnings. and the market is out of action today celebrating the coming of age day. mon tar policy does have an impact on the yen today. the japanese currency soft.ed to a the 1/2 year low against the greenback. we'll see how that market reacts when it comes back online tomorrow. ought trail ya's asx 200 eked
out a modest .2%. and india's sensex is trading higher by .9 the%. >> catch you later. thanks for now, sixuan. we're going to take a break, but there's plenty of stuff to keep you entertained on our website. goldman sachs, also the rules have tightened for holland's famous coffee shops last year. but after plenty of confusion, it looks like amsterdam will repain a smoker's haven. ross. still to come, italian finance minister said what italy needed to achieve after its critical elections. what are you doing?
nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
eurozone officials declined to comment on the report. as we mentioned ahead of the show, david cameron is beginning to feel the heat. over the weekend, just 26% members would like to maintain britain's current relationship with europe. while 29% want them to be less restrictive or for britain to exit the block entirely. >> do you think this is something like scottish independence whereby the more they implement it, the more british people come about it? >> to exit the eu? i think the base case is they would like to stay in it, but have a lot more control. i think that's clearly going to be the aim for the government and that's where boris johnson sits and i think that probably
ties in with not the majority of you, but the larger view, the base view of most people. >> about how does it go down in brussels, they would like to renegotiate on their terms? >> it's going to go down very well. but if they're trying to incident gragz closer iens in the eurozone, clearly, at the u has to change. the challenge will be working out how you do that and what the institution -- what they have at the moment are eu institutions for which are used for the eurozone. they may have to create new institutions for the eurozone and a different one for the eu. i don't know. >> sounds like a headache to me. there's a little over a month to when italians head to the polls. >> i'm not any expert about political polls. i think what is important is
that the works that we have doing as government, this government, the monti government has to be continued. we are absolutely convinced that italy needs to continue this reform process to basically find new productivity on solid ground. so we will have to pursue what we've been doing. >> mr. bersani, the center of the lion's suite has come under a lot of criticism for being anti-reform or not really having the aptitude or stomach for reform that the country needs. i realize as the incumbent finance minister, it's difficult for you to go overboard in commenting on the political process. but do you think some of that criticism is well founded and
justified? >> well, i can only talk about facts, this government and my government supporting government. mr. bersani is supporting my government. and all the reform that we've put through have been possible because of a support of a bersani as well as others. i think the party were able to join forces and push forward with reform. >> i hope that will continue. >> all right. that's the views of mr. grilli. daniella joins us for more. it's interesting to note the good reception italian auction from last week is reconsidering a new benchmark 15 year. >> yes. i think italy is going through a
political cliff. of course, it will last for a little while until the election and shortly after. they're the one thing to watch that will happen in the higher trend, it is a majority premium based on the regional basis elected in the lower claim better. so it is possible to have a very unclear majority. in fact, it could even be the possibility where one coalition joins one chamber. in the case of mr. better sanny, according to the polls, led to form an alliance, will have to open it up as he says to the center and the former some kind of an agreement, perhaps an informal one with mr. monti. >> and we're looking at the italian curve. the ten-year is still below 4.2%. what impact is likely to going to be on markets for these
elections? >> i think part of the express has an impact over the italian markets over the past several hours. it is one factor to watch. there is short-term interest rates and on equity returns where the general thought is that markets might not like uncertainty. but there are many other developments that one has to take into account. markets are well behaved, i think, because it's diminished the euro, because there is a backstop now in the form of umt bonds for programs and the accounts see more at this juncture. >> and you mentioned, too, for people trying to gauge the election to watch lombardi, you call it the ohio of italy? >> that's right. it is not only a crucial region when it comes to holiday, but it is a very large economy by
national standards. there it is uncertain according to the voters intentions what will happen in the finish. but surely it is the one to watch in what might happen in italy. my sense, however, is that italian policies are unlikely to change. rad calculatists is likely to stay with the family budget in 19 over the past 20 years or so. the question, however, is whether the next policymakers and politicians are likely to spend on the economic fabric and achieve a new normal with sustained growth. right now and so far there is a different, a less appealing new normal with a very low growth
potential. >> if we've got a political situation, europe has it backing up. how likely is it actually get enough political support to activate the omt for italy should it need it? >> it depends on the timing, i think. first of all, the mere existence of the emc has done a gate deal of good. it's just that the back stopper is there that creates the protection in the marketplace that there might be more of a flaw. but surely, markets work to deal with the backstop, one is to have a government if place to do that. it should happen very soon at around the election period it would be difficult for any italian government because it's not there yet to sign is memorandum of understanding and all the conditions that go with fomc support.
further down the line, i think that the chances are that there could be a government where mr. monti and mr. bersani should form a formal alliance and can decide whether this is the best course of action. >> thanks very much, indeed, for you that. kelly, i think you and i know where we're going in london, lomoni. >> it's really the only reason why we want to go there, it's the key city for the election. >> i'm just looking at the hotel there. >> it would have nothing to do with the wine & the food and -- >> there's shopping. >> there is that. this isn't the last we've heard from mario monti, although as long as that's a surprise to anyone. >> gererali, one of europe's largest, is promising a revolution. he has appointed a new cio/coo.
he said the company will strengthen its investments in europe. shares have been volatile today. they're now down .7.5%. >> and credit suisse is set to cut the size of 2012 bonus by 20%. carolyn has got more from jake with the detail. hi, carolyn. >> hr there, ross. this is all based on a local press report of the weekend. nothing has been confirmed by credit swiss so far. but the fact that there is speculation over the bonus poll being reduced, that is a surprise. ubs is expected to do the same. the question is how big is the cut going to be? credit suisse has cut its bonus pool for the last three years. this year, it will be capped at around 2.3 billion. so that will be a cut of 20%. but if you go back to, you know, the hay days of 2009, the bonus
pool was a whooping $7 billion. so the days of the big, fat bonuses for bankers may just be over. but this is a big result of the cost cutting guide that's going on at the bank. credit suisse is aiming to cut costs by around $4 billion by 2015. so all in all, not a big surprise. rots, a little bit later on the show, we're going to be focusing on another big story today. watch group, one of the big watchmakers in the world has bought the u.s. business of harry winston. >> i love that story. we want, though, to stick with the financial news in a moment and give you an update on goldman sachs. that company may avoid paying uk bonuses until after the 26th. goldman is among a handful of banks considering the move
despite a hostile attitude towards anything that looks like cash avoidance. if they don't pay bonuses until april, does that effectively spread that out over a longer period of time, thereby not creating such a hit? sxwlit would be allocated to whatever the year is allocated to. even though it comes out -- i'm just trying to wonder whether that's the way they might do it. >> but do you think that now that this is being reported, that the other banks will join him? >> when that was announced, i would think if you're in a small -- if you're open, you would wait. everyone is going to be doing it, so everybody will be doing that who has control over it. if you were running your own business, why wouldn't you wait to pay for the dividends until -- >> and the interesting question then becomes if the bonus has shifted to april, that puts them into the second quarter. will there be any impact to growth especially when we look at the year on year figures from
and these are the headlines from around the globe. shanghai composite up more than 3%. indian inflation hits a three-year low in december, spurring home for further central bank easing to its growth. shares of get off to a slow start as they boost profits by 25%. and it's merger monday. switch group buys harry wins toip's corporation. but ubs is walking away from its offer for tnt express. >> that news is having a big impact on tnt today. the xetra dax up .7%.
the ibex up .7%. >> strong moves across the board. take a look at what is happening in the bond space. we have seeing what lax like a rotation out of the periphery. 4.97 mers on the ten-year. italy at 4.17%. bund and gilt seeing are youly the same levels we've seen for the last few trading sessions. >>. >> and on the currency markets, we'll focus again on the yen against the greenback. 89.67% is where we were. euro/dollar holding on to the gains and putting more meat on the bone. 1.3368 is where we stand at the moment. >> now, china investment corp. is reportedly interested in a stake in daimler as the chinese sovereign wealth fund looks to pick up big assets on the cheap.
during the financial crisis, the fund made vervel bad bad and has since developed a safer investment strategy. >> the chairman and ceo said the funds recovered last year. >> translator: 2012 was a much easier year than 2011. and the returns are much better. but the final numbers have not come out. the reports for the long-term assets will come out a quarter later, but we are confident our returns will know over 10%. >> how would you describe how the cic changed its investment mentality or methods? in 2012 over previous years? >> translator: we did not change our approach towards investments. it's just under the current circumstances, we changed some tactics for investment. we had to change our tactics because we opened some volatility in the market,
especially volatility that is created by policies and has hampered the return prospects. >> is it dangerous to lump the west as the west because parts of europe say the uk have been actually very welcoming of ch e chinese investment. >> we had to distinguish between countries. the countries that welcome foreign investment the most, both in the government and in the general public are the uk and canada. but u.s. is not the same. europe used to resist foreign investment, but as their circumstances worsened, they have changed their position. >> you're planning to focus more of your half trillion towards asia. where specifically in asia? >> translator: in the next decade, we believe china will continue to drive the global economy and the neighboring asian countries will be driven more directly by chinese demand and they will be good opportunities. >> do you think it's difficult for china, though, when
relationships between the prc and many other countries, especially last year, have gone through so much stress, territorial claims, some people say that the damage that has been done is going to be very, very difficult and in some cases impossible to repair. >> china is having some territorial issues with neighboring countries. for example, a kwaurel with vietnam. but cic partnership with international investors and it has been going smoothly. but generally we are cautious in investing in countries that have territorial deputies with china. we don't want to take the public relations risk. on the other hand, we are very good relations with china which mainly invest in russia and cis countries. >> at the same time, though, south korea's finance minister told cnbc how his country might
deal with future concerns over chinese growth. chery kang has more. >> hi, kelly. south korea's finance minister says whether the country goes more more stimulus depends on how the chinese economy performs and whether the chinese economy grows 8% this year. here is a clip from his exclusive interview with chloe cho. >> the korean economy is quite resilient. but should chinese executes undertransform, i'm sure they could adopt an additional fiscal government and policies. the government's plans to boost welfare and create jobs are an extension of the current government measures though there is policy continuity. even from a macro perspective, i don't foresee much difficulty ahead. south korea's economy has been hurt by falling exports
which could continue, by the way, as the won rises. last year, the country's exports shrank by 1.3%, due to weaker demand overseas. mine wheel, when the new government here in south korea that is officially kick off here next month is facing calls for more enhanced welfare policies after the president elect promised them that the new administration needs to persuade the public that the right amount gets spent in the right areas in a tailor made program. we've still got seng wun with us out of singapore. you've heard there are concerns coming out of korea. what about you? where do you see the economy economy heading in 2013? >> i think it's probably the view of many other central bank
policies as long as we have chinese economy on an even keel. if any risk to that one it certainly would be the result of a huge external shock which in turn would be affecting us. so at this point, i think we're keeping our fingers crossed if nothing bad comes out, fingers crossed from europe and u.s. basically continue on its global recovery path. then i think asia itself would get a fairly good year, i think, in 2013 itself. that's the expectation certainly at this point. >> what happens to the regional currencies? because everybody is still trying to -- thy neighbor on currency weakness. >> well, i think what we're seeing now is less on the issue at this point itself. we've got growth coming through. the pressure on each other's currency certainly has lessened somewhat. the good side obviously at this juncture is whether the u.s. economy, u.s. dollar can
continue to recover or whether this is the year for the u.s. dollar to stop. if so, we will get some pressure across the region. so to some extent, the pressure is off the policy planners here from having to do anything because it is a case of the u.s. dollar strength than each other trying to weaken each other's currency. >> all right. let's get a final thought from you in just a few moments time. >> swatch is set to bare harry hen winston for $750 million. at least the luxury jewelry arm. the world's biggest watchmaker will spend up to $250 million for the brand. swatch says the acquisition compliments its prestige portfolio brilliantly. the deal does not include harry winston's mining companies.
i was surprises harry winston is a canadian company. we saw last night all the stars decked out in harry winston. i don't know. i was surprised that it was not american. it's not like i'm going to turn around and buy some harry winston jewels, but -- >> maybe someone will buy it for pup. >> i'm not holding its breath. and european plans are talking about blocking the sale of such companies. tnt says there's no realistic path towards approval now and that the group does not receive an approach from fedex. >> according to charles watson, the deal predicts deal flows remain subdued this year with the exception of asia. joining us for more, steve allen.
it's a good luck call. to widen that flowing through into the start of this year. i know we've just seen that deal called off. >> deals didn't buy confidence. companies are looking at m&a. you can create value from it. these things are expensive. it's a business risk. so i think we saw at the end of last year with the recession in europe, the fiscal cliff, was it going to happen or wasn't it going to happen? a lot of companies are quite nervous. so what effectively we think happened to end the year, let's close it now, but fundamentally is that going to mean a pick up in activity, a pick up in confidence snpt. >> probably not. >> did it actually bringing forward activity and is it supported by the fiscal cliff? >> to a larger extent, yes. m&a that was going to close in 2013, companies fall would close before the end of the year which, of course, the u.s. company is a fiscal year. so close those deals, but i
don't really think it's going to mean the end of the year. >> in one sector or another, is there one sector or another that's going to have more of it than another? >> i think if you look at the activity, most of the deals would invite the u.s. and north american companies. steady growth is the way we phrase it. asia was fantastic. they really picked up. europe has been the second biggest -- >> did you think china would become the biggest player in europe. >> yes. >> are they spreading out from their -- is that strategic m&a for them or is it the chinese companies just wanting to get global share? >> exactly. i think asia picked up last year. but if you look at asian deals, to this, neither one have come out of asia. there's been a lot of chie chinese deals that have tended to be domestic.
particularly, you look at europe with a lack of confidence in european companies. from a buyer perspective, there's less competition. >> and we just heard cic saying that they to some extent prefer to buy into the europe markets directly. so it's to some degree about m&a. it's also about exposure to europe it sounds like. >> it is. and certainly this is something we've been doing for the last five or six years. m&a does deliver value. so companies that buy companies that integrate well -- and is that's the hard bit. it's one thing to close the deal. the value comes when you actually make a go of the bit strategy and get the employees working together, which is where we really focus. but that works works. so we consistently share on average deals do create value. so if you do it well -- >> and that's still a contentious point, by the way. does m&a deliver on the deal it's promised? >> it's also totally dependant on the process of incident
gragz, isn't it? there is value there in the idea. you can waste it, can't you? >> exactly. >> if you don't do right. >> there's the media of the train wreck. the wraelt is big deal goes horribly wrong, you guys are going to talk about it. >> what success stories haven't we properly covered? >> when we do studies, most deals do create value, the one that's don't get the headlines. but the integration is getting those two workforces together, bring them together and get them to behave differently. that's the hard bit. companies are generally much better at that. that's where we see the real big change. >> and most company leaders seem to get the business of people. >> and some are pure. most businesses are about people. >> get the people working together. that's the challenge. >> but i also wonder as more of this becomes cross border, driven by, for example, it's hard enough to say you have two
european players integrating. it must be extraordinarily difficult. >> i don't see any of that happening. >> not between china and japan. but china coming into europe, absolutely. and certainly when we've done this, the cross regional deals are harder. people think in different ways. what a chinese employee want and a european company are fundamentally different. companies have to be aware of that. >> still 2013 it sounds like won't be quite as strong as 2012. >> i would love to say it's going to pick up. i really don't see it to be honest. >> thanks very much. tweet deck is facing closing in the uk. firm has been fined twice already in its 99 days to file up to resolve by the government. why wouldn't you file the
returns? apparently they were made aware of this at the end of the laugh year. twitter uk had to file its papers and did and that's how we learned that while they were profitab profitable, they didn't make a ton of money at the end on of 2011. >> they're in profit, though. >> yes, they are. for a social media company, that isn't bad. they are supposed to be going public at the end of the year. >> yeah. >> so the question is, can you imagine a world without twitter? what would you do? send us your e-mails. >> should we tweet? maybe not tweet. maybe not tweet because i can't imagine what you would do. >> send us a carrier pigeon or something. >> yeah. or a written note @rosswestgate.
the runner the old way. >> still to come on the program, would slower inflation out of india pave the way for a rate cut? we'll discuss when we come back. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
welcome back to the program. the odds of a rate cut in india could be on the rise. the country's headline inflation slowed to its lowest level in three years and that was 7.18% in december. could open up reserve for india to try ask boost economic growth. the pti did accelerate 10.6% on higher food rices. there are some mixed signals on this front. sitting there with seng wun who is still with us, amid these differing inflation reports, what's the take away? >> well, it is a bit of a mixed message coming out. this headline wpi was broadly steady. you had food inflation ticking up partly because weather conditions have been a bit on the chilly side in december. in addition to that, you had cpi
core inflation pulling in the other drengz so that was a bit more encouraging. as you mentioned, cpi inflation started to tick up. what i would say overall is that india is not quite out of the woods yet when it comes to inflation. a lot of inflation we have in india is essentially more structural in nature because of lack of structural reforms and infrastructure investment projects. so that's going to be with us for a while. there's a risk that penned up inflation prices could see incoming in months and quarters. so from our perspective, inflation is going be around current levels for the foreseeable future and only tlaf decline gradually. >> seng wen, do you want to jump in here? >> i think core inflation, not less about indian inflation, but structural changes happening on the ground here. we've got malaysia introducing minimum wage. we've got jakarta raising minimum wage.
we have thailand, bangkok doing that and also vietnam doing that. so i expect that will start to be an issue here while this is a non-issue. >> i think, i would probably say in asia more generally speaking, if you look throughout 2013, inflation pressures are still going to remain relatively contained in the current couple of quarters. but as recovery sort of takes hold, there's not a lot of slack left in many asian economies. so when that starts to move up to growth and you start to see underlying inflation process becoming up, i think to some extent the adjustments you see in minimum wages are a traumatic event. and for central banks in the region begin to go hike rates dearth the second half of the your. >> we can see inflation for us
or even back in india. >> i think india will be further ahead in the inflation side. for asia as a whole, i think we see inflation as an emerging problem during the course of 2013. so there will be a bit of a shift from growth risk to inflation risk in the second half. >> yeah. i take it everything you said about inflation, as well, in india, nonetheless, the yields are down to a low. you seem to be suggesting yields aesh going to drop any lower. is that what you're saying? >> well, one thing is what you should do. another thing is what the rbi will do. in my view, i don't think there is a strong case for a policy rate cut at the moment because inflation is still lingering. there's still up side to inflation moving ahead. the big portion is structural in nature so you need to get traction. that being said, the rbi has signaled its intention to ease
monetary policy during the january/march quarter. and i think there is a good chance that they will cut policy rates as soon as january, if not january, certainly in march. so they most likely will begin to ease monetary policy here in the short-term, but they can only do it gradually. so overall, we're only looking at rate cuts of about 50 basis points. in addition to that, that's contingent on fiscal policy start to go pull back. the overall and monetary policy mixed as well as widely focused on structural and supply side measure toes deal with both lifting growth and get inflation down on a sustained basis. >> and we'll leave it there. song seng wun, great to see both of you this morning. i should say this afternoon. they are in singapore, after all. tomorrow, we'll find out whether china hits its goals of $220 billion when december data is released.
welcome to "worldwide exchange." i'm kelly echs. >> and i'm ross westgate. it's merger monday. swatch bought harry winston's brand for $760 million. but u.p.s. has to walk away from its $5.2 billion offer for tnt. >> a choppy session for generali. the italian giant vows to boost operating profits by 25%.
if you're just joining us this morning, stateside in particular, welcome to the global trading day here with cnbc's "worldwide exchange." kelly and i are back together for most of this week, i'm happy to say. we're waiting for central production out of the eurozone. output down minus 0.3% month on month. down 0.3.7%, as well. the month on month forecast was for a rise of .1% with a year on year forecast for all of .2%. it is the biggest drop since november 2009. we had very disappointing german industrial production, as well. that country is flirt, a negative quarter in the fourth quarter. and we'll see if that takes the shine off euro/dollar, which has been up at the highest levels since march last year. i was going to say march this year, but up to march 2012.
we hit 1.34 earlier. not having an impact straightaway, kelly. maybe people expected a bad number. >> we saw people hoog for weakness after we got disappointing figures out of germany and the uk. but still, keeping eye on futures here, not a ton of reaction immediately. people might have a sense that november was the worst of the crisis and we've moved on. as we take a look at the u.s. trading session today, they're looking for a bit of a buns on the chinese markets overnight and on the momentum that stock ves generally confronted lows. the dow jones industrial average pointed higher by almost 30 points this morning. the nasdaq is pointed a little lower. the s&p 500 is trying to add a couple of points as it crawls ever closer to that 1500 level. you get a sense of what's been happening with european markets overnight and after those disappointing production figures. first, though, the ftse cnbc global 300 is up almost .25%.
while japan is closed today, the chinese market has been overwhelming movements coming out of the globe so far. ftse 100, 0.15%. the xetra dax, strong performer this morning at 77.82. not seeing too much concern tierizing there. the ibex 35 up .6%. again, it may be adding to the sense that perhaps november was the weakest month for the eurozone and perhaps there's been more yields this year. >> that's right. spanish yields are just below 5%. 4.96% at the moment. italy, they're talking about the possibility of issuing a new benchmark 15-year bond. if they did that, they would try and show they have confidence in their bond funding, as well. the dollar/yen, a fresh 2 1/2 year low against the greenback. 89.67. we're trading 89.34.
prime minister abe is putting more pressure on the bank of japan talking about a medium term inflation target. the nikkei was wonder wlg they should have an employment target like the fed. and euro slshl dollar, 1.3385. we have been up to 1.34. the high not since march, but since february 2012. that is where we stand right now in europe. serb won has more for us from asia. >> asian markets mostly in the green today as the clear outperformer is china's shanghai composite jumping a stunning 3% today. the index hit a seven-month high on talking about increasing the quota. investors are filling up ahead of the 2012 gdp data due out later this week. if you'll recall, late last week, growth could come in at 7.7%, surpassing beijing's
target of 7.7%. so financials and military stocks were the biggest winner necessary today's rally. strengthening mainland blue chips helped boost the sang second higher by .6%. the globals porter li & fug dropped today. the yen has softened to a 2 1/2 year low. elsewhe elsewhere, south korea's kospi add .5% today. australia's asx 200 finished marginally in the green and india's sensex just touched off gaining a strong 1.4%. back to you. >> all right. thanks for that, sish we know. have a good evening in singapore. >> and the s&p 500 closed out
last week at a fresh five-year high. so are we finally seeing major shift in investor sentiment? joining us now is daniel morris, global strategist at jpmorgan asset management. welcome. >> thank you. >> i think some people are talking about these fund flows and whether they're starting to see a wall of funding coming into the market. what do you think? >> it would be nice, certainly would be helpful for the markets. we will have to wait and see. what you see is when dividends are going to be paid for the show, it will show up and they're reinvested. so this is a apparently we've seen in the past. so it may be a bit of that. that said, these numbers were pretty large. >> tell us what they show, exactly. >> i think what we've seen now is hopefully we're seeing a change in sentiment, but we're not so sure. i think we'll see a couple more weeks of this and in particular need to see annelcation towards equity funds. retail investors have continued
to pull money out of equity funds even though institutional investor ves put money in. >> i saw some data the other day sewing that even the institutional side has been pretty cautious. and it's corporate buybacks that have supported the market over the past couple of years. >> that's been part of it. generally you see a high correlation between buybacks. so they kind of happen at the same time. it's hard to know which one is buying the other. >> what else are they going to do with the cash? it's not a lot to say they're going to invest in machinery or whatevers. i think that's going to continue before we start seeing a big uptick in investment. capital expenditure overall, it's probably going to need stronger economic growth before countries see the need to do it. >> and to go to the market, a lot of people is seeing this fall into place, but do we not
start to look at the commercial investor get involved. >> even though we've had this fantastic rally in equities, they've continued to move out. really, if you were someone pulling money out of equity funds, you missed 20% last year. >> although you easily could have gotten 20% in bonds. you could have done well on either side of that trade. >> yeah. and i think the question is now what about this year? are you going to be able to equal those numbers from last year and are equities and bonds going to do the same as they did last year? >> also coming up, bank earnings for this week, as well. jpmorgan, goldman sachs, will get the ball rolling on wednesday, followed by citigroup, morgan stanley out on friday, as well. what do you expect the banks to tell us? >> i think probably two things that are going on. one, clearly they still have the
same possibility challenges given where base rates are and the positive rates and so on. but i think maybe one thing that's going to change perspective, we've had this dilemma over the last couple of years in response to the crisis and seeing that the financial sector was certainly at the quarterback. the governments and regulators feel that they need to do more. so you've had a substantial increase in regulation. >> the guy with inflation in basel was one example. yes. and that should support better profitability than people were expecting. on the margin, you'll see continued outperformance in the financial sector this year. >> a lot of on these are trading much more in line with that. how much further can they go? >> well, i think it's the marginal change right now in
terms of the outlook. before it was baked in, but still the marginal benefit is there. secondly, if you look at the relative performance of individuals, it's been underperformed. >> daniel, stay with us. we'll have plenty more in just a bit. fist, things to watch for today, fed chief ben bernanke will be speaking at the university of michigan later on discussing long-term challenges facing the u.s. economy. his comments will set the tone for a fed meeting scheduled for later in the month. >> it will be interesting to see how that jives with what we heard over the weekend, as well.
. also, following, apple's report is slashing orders for iphone 5 components because of weak demand. reports suggested the tech giant discussed cutting orders for its iphone. president joe biden is delivering a recommendation on reducing gun voice to the president tomorrow. he said several proposals have broad support, including enforcing background checks and banning high capacity ammunition magazines. biden was asked to come up with the recommendations following the sandy hook shootings last month. the debt ceiling dispute is heating up. the white house says congress can pay its bills or it can fail to act and put the nation into default. some reports suggest the government could run out of cash to pay all its bills as early as
mid february. >> thanks for that. there's plenty to keep you entertained on our website. singapore is trying to cool a property market and find out if the city stands a chance. goldman sachs says it may delay tax et in the uk. and after much confusion now in the last year, it remains amsterdam, at least, can enjoy watching the television. comments between surrounding alarms. although i think it's been overplayed. we'll talk to that when we come back.
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also, the british prime minister david cameron is beginning to feel the heat ahead of a key note policy speech on europe which he's expecting to make next week. just 26% of members would like to maintain britain's current relationship with europe while 59% want tie toes be less restrictive or for the uk to exit the block. at the same time, a poll published yesterday in the british sunday people said that 33% of voters would opt for a complete withdraw from the euro. as i say, david cameron, when he makes his speech next week, he's expected this that speech to announce what he might want to do about a referendum. >> that's still on the agenda for this week? >> yeah. we thought it was going to be next tuesday. but it may be now on the wednesday because on the tuesday there's a celebration between
germany and france since it's the end of the war and the coming together and the start of the -- >> and he didn't want to preempt that? >> yeah. probably not the best day to make a speech about renegotiating the eu. >> and it's a big week. >> meanwhile, france has been attracting some unwanted attention with much suggesting the country could be the real trouble spot for the euro. daniel morris is still with us. daniel. >> you take some comfort from what's happened in france in the last week or so, particularly with negotiations between the unions and corporate. >> sure. i think in general this idea that france is going to turn out to be the next peripheral, i think it's a bit overdone. i don't see the risk there. first off, if you look at how much debt france has, it's about the same as germany, about the same as the uk. secondly, they are making efforts. it's difficult. it's still a democracy. they have to please their own voters and their own party, but
they did pass the 20 billion euros in tax cuts last year. that was approved. they are more or less speaking to their deficit reduction target and very significantly this agreement which beat expectations. it certainly was a risk that met up the business association and the unions would not come to agreement about making the labor market more flexible, that it would have to be imposed by the legislature and that could have created more legislation. but in the end, they got three out of the last five unions to agree. >> do they have growth? >> well, you know, who does? i think at this point, i don't think we can ask too much out of france right now. they've got, i think, the targets for gdp is now 0.2%, 0.3%. but it's kind of the same thing facing the rest of europe. i don't know if that's is particular to them and they are going to be able to pay their debts. it's not going to be a spiral debt that puts us back into the crisis again. national retail federation
conference in new york kicks off a week for gatherings in the u.s. >> we'll take a look at what investors could glean from these events. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office. olaf gets great rewards for his small business! pizza! [ garth ] olaf's small business earns 2% cash back on every purchase, every day! helium delivery. put it on my spark card! [ pop! ] [ garth ] why settle for less? great businesses deserve great rewards! awesome!!!
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its offer for the company because of european commission plans to block the sale. tnt says there's no realistic path towards approval of the plan and the group has not received any approach for the likes of fedex, either. swatch will assume up to $250 million of the brands pro forma net debt. car carolin roth joins us. >> swatch are shares are trading at an all-time high. the price target is $750 million. $250 million. that's very important to point out that this transition does not include any mining activities of the parent company. the parent company will change its name to dominion common corporation.
the transportation, it secures much better access to north america and that is the rationale behind the deal. he also said switch may generate some 9 billion swiss franks. that would be yet another record. let me tell you what the analyst community is making of the deal this morning. some say it's pricey, but swatch has so much catch on its balance sheet, not a problem, and it will add 5% to swatch's sales. back over to you. >> thanks for that, carolin. >> i was surprised to learn it was a canadian company because you see so much of it on the rest carpet. thousands of companies convene in new york city for the national retail federation conference.
walmart, macy's and starbucks are among the big names that will be there. now our very own cnbc contributor. president of sw retail advisers, stacey widlik join us now. i know you were staying up late to watch some of those golden globes. thanks very much. let's talk retail briefly. how important is this conference? more importantly, wa kind of commentary are we expecting to hear from the companies about earnings going forward? >> well, this week is like the super bowl of retail. we have the nrf conference starting today. then we have another conference in miami followed by the luxury conference. so you'll hear a lot of themes this week. you're going to hear about everything from effect of the payroll tax increase to the impact of companies trying to integration their digital with their stores. so i think one of the themes
last year at these conferences as last holiday season was so difficult was there were a lot of companies preannouncing. so look out for that in the next few days. >> do you expect more of that? and last year, we know that it was a tough season so i guess that preannouncement was expected to some extent, even if investors weren't thrilled about it. is there any reason to be more sanguin this time around? >> well, i think this year in retail, it's more about the have and have-nots. last year, it was topped right across the board. but this year, we've heard some preannouncement.s. we've heard some of the teen retailers. aeropostale didn't do well, but american eagle did. it's very much apprised of who is keeping inventories lean. clearly, we saw the holiday numbers last week come out and they were challenging. >> dana, you like consumer
discretion. you think it can do well this year. >> yeah. and i think in particular for consumer discretionary, what are the marginal things that are going to change this year? certainly the increase in payroll taxes is going to have some type of impact, but i think people knew about this. it's a question about how much they spent it before. i don't think it's necessarily going to have a big impact. >> and stacey, any particularly big company there that everyone is waiting to hear from that might expect the trend or the buzz? >> absolutely. so we've heard from the teen space. we heard from tiffany last week which was very disappointing. and i think one of the most anticipated names that preannounce on the positive side in the last two years was lululemon. so i think there's a lot of assumptions out there that the company will preannounce. so, you know, it's expected to be on the up side. the question is, will it be enough for those expectations? >> all right. so thanks for that. good to see you, stacey, joining
welcome back to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. here are your headlines from around the globe. >> u.s. investors look for an encore after the s&p 500 reaches a fresh five-year high as the shanghai composite is up over 3% and foreign investments restrictions will be relaxed. swatch group bought harry winston for $750 million. but u.p.s. walks away from a 5 billion euro deal from tnt. >> and generali unveiled a new major overhaul vowing to boost operating profits by 25%.
not too much movement on futures since the last time we checked in. the dow was looking to add about 25 points at the open. the nasdaq is the weak link here. appearing has been weighing on this endecks fort last couple months. more news out for iphone. the s&p 500 trying to continue its rally, adding a few points here this morning. and it follows an overnight session in which china really set the mood. the shanghai composite is super strong of about 3%. the ftse global 300 is adding about .16%. so it has come off a little bit since we checked in. european bourses give you a sense of the trade here. they've come off of it. the european industrial production figures for november were quite weak. the xetra dax still up abo about .7%. so it, despite lagging so far this year been now one of the leaders this morning. the cac 40, up .5%. the ibex doing okay, too. now, if you're wondering where
to put your money in these markets, daniel morris and jpmorgan says investors could do worse. >> are you going to be able to equal those numbers from last year and are equities and bonds going to do the same as they did last year? >> meanwhile, u.s. investors are count to go down to make bank earnings this week. it's bank of america and citigroup on thursday. finally, morgan stanley out on friday. christine short is global markets intelligence manager. hi, christine. nice to see you. look, what do you think we're going to learn this week from these guys? >> well, you know, currently, we're looking at an s&p capital growth rate for the s&p 500 of about 3.3%. i think we could learn this week is much of the banks, as you've mentioned in your previous guests have mentioned are looking to beat expectations. we've got citigroup expected to
come in at 156% growth. morgan stanley looking to post positive earnings per share of 32 cents in comparison to negative 14 cents that they posted in the fourth quarter of 2011. both have strong showings tr bank of america, goldman sachs and many of the other large banks. so if these companies come in at what analysts expect them to right now, you could see a big pop in the earnings estimate. but if they come in at what current companies are positively surprising by, which is 3%, we could see an even bigger pop in that overall growth estimate. so i think it could be a good week for s&p 500 earnings. >> we're going to get a bunch of tech companies, though. and they seem to be a place where investor res concentrating concern in apple and some of the other names. what are the expectations there? >> well, financial sess one of the leaders is about 10.6% growth expected. tech happens to be one of the laggers this quarter. it's surprising. throughout 2012, we saw the ip sector doing quite well.
now we're looking at an expected growth rate of 0.17%. really this quarter looking to pullback a little bit. the estimate suggests they will be down about 3.5% on a year over year basis. but it's not just appear approximately. although they have a large impact on the overall job growth rate. of course, that's due to the continual demise of the personal computer. any companies linked or making commoditized trips need to be suffering this quarter as well as computers and peripherals. that sector or that industry, rather, expected to be down about 5 3ers, really dragging down the overall sector. >> that's right. and we are going to see some bellweather names including ebay and intel reporting. on that note, john fort has this note on what we might expect. >> we have a bit of an unusual start to the tech season this week. because of this unusual start, we're going to get rare insight into how other tech companies
might do. ebay is out first on wednesday. wall street is looking for 69 cents in eps on revenue just under $4 billion. market place business will provide the first read on whether e-commerce was as healthy as channel adviser estimates. on pay pal, a year ago was $4 billion of buybacks over the year before. expect another huge jump and that is big percentagewise as people completed more purchases from smartphones and tablets. the results he or she provides insights into amazon's report. and then on thursday, we have intel. wall street expects earnings per share at 45 cents on revenue. 13.76 billion down from a year ago on the top and bottom lines. the two things to watch for here, overall pc client group revenue was down 8.3%. how was there in q4 with the windows 8 launch? based on these numbers, we'll get hints about microsoft, hp and dell among others. and then there's intel's data center group revenues.
those are important to watch. if companies are spending money on servesers, that bodes well for other players like ipbm. guys, back to you. >> okay. john fortin there. christine short is still with us. apple doesn't report, i believe, until next week, but it's seen as a drag on the market. just by how much? >> well, if we remove apple, it doesn't have a huge impact in the past few quarter b, we did see it giving a boost to the overall s&p 500, into the overall i.t. sector. if we pull it out, it's improving to negative 1.5%. and the overall s&p 500 growth rate improves to 3.6% from that 3.3%. so it does have a minor impact. we would like to see it, you know, coming up on positive year over year growth rate as opposed to a negative 3% it's speccing to see to the forty quarter. >> what are the other laggards
you're going to look at? >> the top lag dp ards for the quarter are industrials. they're expected to be down about 2.6%. within there, we're looking at the machineries industry. they're expecting to be down double digits, followed by aerospace and defense. companies like boeing, lockheed martin, call back in the third quarter, they came out with earnings for the fourth quarter saying they expected the end of the year to be rather slow. that's not so much of a surprise there. >> yeah. we just heard from daniel morris that he quite liked consumer discretionary. what do you think they're going to post? >> about 11.6%. i would getaway with what your last two guests said. although we have mixed data over the holiday season with mastercard coming out, calling it the weakest season since 2008. however, we ever strong same-store sales. tomorrow, we'll see how the holiday season fared when we get retail sales figures. but so far, analysts expect it
to be the strongest sector. but, really, we're seeing the strength in house hold billables. that strength is expected to be up about 50% based on strength within the home builders. we're looking at companies like pulte group and lennar expecting triple digit year on year growth base odd a return in the housing sector. >> christine, good to see you. thanks for joining us. i know it's early. >> it's extraordinary to me that consumer discretionary is still so well liked among investors. daniel made a good point. doesn't it do well at the beginning of the cycle and strength rotates? but he said it never did that well. you never got the burst of consumer spending in the recovery. >> and is if people feel a little bit better about housing -- that so, it's such a spotty thing. >> and it comes with the payroll tax hike hitting. we'll see if sentiment changes. >> that's one of the things that people don't know until they see
it in the paycheck. >> granted, fuel price res offsetting that. but so many mixed signals, nevertheless supporting signals. meanwhile, twitter is in the news this morning in the uk. its company, tweetdeck is facing closure after repeatingly failing to fine closure. they face being dissolved by the government. >> and just to be clear, that's tweetdeck in the uk, not anywhere else. >> so the question we're asking you is can you imagine the world without twitter? what would you do without it? send us your views. i don't know whether you should tweet your views about twitter. send carrier pigeons, sent your footman, your batman or your
runner to me, @ross westgate. >> and stick around because coming up next on the program, automakers are taking the wraps off their latest design for the biggest auto show of the year. phil lebeau joins us live from detroit when we come back. with the spark miles card from capital one, thor gets great rewards for his small business! your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics. put it on my spark card. ow. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve great rewards. [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day!
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welcome back to the program. generali's new ceo mario grekco has vowed to boost operating profits. the italian group is prom promising a revolution. he also says the company will strengthen its investment in eastern europe. he did rule out further acquisitions in the area. he also is making comments here just in the last 10, 15 minutes saying the company sees a $4 billion euro boost from asset sales by 2015. shares have been mixed this morning. they open about .5% higher. down about 0.5% on the lows and they're still down about .5%. this is according to italian newspaper reports, fiat is near ago deep with jeep to build
jeeps in china. its stock is up 6% today. >> mention china, it's -- >> i'm going to mention china every other breath on the show because that has to be a good thing. >> in auto termses. volkswagen has reported a 7.2% delivery in 2012, the best sales year ever. the carmaker says sales in the u.s. are up 30.6%. we'll get more details on that in just a second from this man, phil lebeau, who is at the north american international auto show in detroit. we'll get on to dw in just a second. i can see a bit of yellow there. where are you? >> yes. eem at the mercedes stand. and you don't see too much color at the mercedes stands, but we have some here. it's an interesting vibe here in detroit. in past years, it was one of things are improving, they're getting better here in north america. this year, it's very clear, this is a red hot market. we saw that last year with sales
growing about 13.4%. they're expected to be up, maybe not double digits, but 8% or 9% at least here in north america. and when you look around the whole show here, a couple of thing stand out. last night, there were a couple of reveals that got a lot of attention. mercedes shows us the cla class. they did show it last night, back up it's not here on the stand. it comes to the united states and goes on sales worldwide in september. also, general motors taking the wraps off the newest generation of the corvette. and they brought back the sting ray name. it has a lot of features similar to the sting ray back in 1963. a huge crowd for that reveal. that will be going on sale later this year. finally, you've been talking about volkswagen. the chairman came last last night and he made news saying that for the first time, it has passed 9 million vehicles in global sales last year, me three
behind toyota and gm but closing the gap with gm because gm is at about 9.4. they're about 300,000 behind where gm is. and he with all know their goal, to be number one by 2018. >> it's an amazing performance by vw. are the automakers going to say western europe is a bit of a disaster? >> you know, we had a chance i think to talk to steve gerski who is with general motors. he is on the board and in charge of restructuring the opal division. he says he's starting to see cautious signs of optimism in different parts of europe. he still doesn't believe that the market overall is going to be strong this year. it might be a tick lower for the auto industry. when you look at what's happening in london, not in southern europe, but in northern europe, he's starting to see a few things where it's stabilizing. so a bit of optimism from steve gurski. >> phil, it's good to see you. phil will be on all day from
detroit on cnbc. it's the only place to catch him. >> i wonder if he gets to drive that car. i i'm sure there's probably a little bit of that going on. if you're just joining us here on "worldwide exchange," these are your headlines. investors are looking for a repeat of last week's composites. >> and beijing could increase foreign investment quotas. and m&a in the spotlight, u.p.s. walks wa away from tnt express. still to come, as well, u.s. stocks have kicked off 2013 with a bang. will be party continue? analysis in just a moment.
welcome back. apple is reportedly slashing orders for iphone 5 components on weak demand. they discussed cutting orders by half. orders for other parts are set to be reduced in the first quarter. vice president joe biden will deliver recommendations on reducing gun violence to the president tomorrow. he says several proposals have been brought forward including panning high capacity ammunition magazines and deeper background checks. and the debt ceiling debate is heating up, as well, with the obama administration insisting it won't negotiate with republicans on raising the ceiling. the white house says congress can either pay its bills or it can put the nation into default. reports suggest the government can run out of action to pay those bills as early as mid february. and the creators of south park are setting up their own
production studio. they've secured $2 million to set up a company called important stud wrote. the new studio will incorporate revenue from south park and the hit broadway play "the book of mormons." and the ftse 100 closed up with a fresh 4 1/2 low on friday. we had a pupil by another market. but today, the xetra dax, cac 40 and the ibex, as well. shaking off that production data. take a look at what's on today's agenda in the u.s. fed chief ben bernanke will be speaking at the university of michigan later on. he'll discuss monetary policy, recovery from the financial crisis and is long-term challenges facing the u.s. economy. bernanke's xhnts will set the tone for a fed meeting scheduled for later in the month. u.s. futures are looking to continue their gains. they're also near five-year highs. the s&p 500 is looking to add a couple more points today. the dow to the nasdaq is a lagger. joining us for more, michael
gurka, from asset management. gate to see you this morning. five-year highs here. do you fade it? >> no, not yet, actually. because i've been taking my two from the dax which is in a serious breakout mode right now. so if we want to look at a parallel universe on some of these strong global equity markets, right now, the s&p has some room and i'm taking some precursors from some of the notions that you've been mentioning already concerning china because we've been getting gilt from the copper market, also. >> so is this about europe, then, or does it come back to china? >> well, actually, i think it's -- it's for the better for once. i think it's because europe seems as though psychologically on the u.s. side, that it's on the mend and clearly looking a little bit better sorted than it has over the last couple of quarters. and for those reasons, you don't have to lean on china so much for their numbers. some of these import numbers
coming in for the soybean markets from china look extremely robust going back a couple years now. so, you know what? i'm going to lean on europe a little bit more as surprisingly bullish. >> okay. so you stick with it for the moment, michael. what will be key for you to tell you that you change your mine pd? >> well, there's a couple things. first of all, if there's any abrupt earnings changes at the end of this quarter, which probably is out of the cards, then that would be something that would make us want to take something off the top on the s&p side. i think on the commodity or the global side is that the euro starts to taper off, even though that looks as though, you know, really strong right now, up about 1.35 or even in that area, i think that's where you start seeing the gas bleed on the brakes, also. >> some have been wondering whether during this part of this year we get a break between dollar and s&p. we change the correlation. do you see that happening or not? >> premature there, also.
i think historically some of these levels look average to middle of frothy, but not yet. and i think maybe by the end of the t quarter as we get to mid year, if we start seeing some accelerations towards 1500 in the s&p, that would probably equate easily to that being said. >> and look, what is your reaction after all the crop reports last week? >> i was -- you know what? the one thing that surprised me the most was the intraday volatility was unreal. you would have thought waits the middle of august during what we just saw last year. i'm very surprised, to see the least. but going forward, at least in those markets, i still think it looks rather bullish also. some of these levels have been pretty beat down. >> mike, turning to earnings real quick, when you saw wells report, do you think that sets the tone for financials, is that going to matter to markets snm. >> i think wells' global perspective is never going to be
hurt for what we're looking for? there's no doubt fwit, though. i agree with you 100%. >> somewhat has your attention turning to this archbl? is it the earnings reports or bernanke or more what's going on outside the u.s.? >> it's probably more bernanke. there's been a lot of emphasis in the bond yields. if you look at the ten year, we're starting to look at areas near 2%. so i think right now at least the pessimism is going to subside through the fed's eye. and right now i think that's a great clue that our fed chairman will give us. >> and we will leave it there. michael gur ka, managing director of chicago based spectrum asset management. good to see you, sir. and we've been asking the question today, can you imagine a wofrld without twitter? quite a lot of response to that. >> meanwhile, people on twitter are commenting on this story where we've seen hungary's finance ministry decrying investo investors. they name check nouriel roubini
has recommending a short position in the currency. he seems to get piled on a lot by the international community. but in this case in particular, they're looking to him a scapegoat. >> right now it looks like, though, u.s. markets tick a little higher at the -- well, we'll see. where are we? >> up 14, 15 points there on the dow jones industrial average. notable, again, if we're building off the five-year highs, you hear michael gurka. >> that's just about it for today's edition of "worldwide exchange." continue the countdown today for the opening of the markets stateside. "squawk box" will start in just a second with becky, joe and abdomen rye. oeshz, from kelly and i -- >> have a great day. see you back here tomorrow. where is flo? anybody know where flo is? are you flo? yes. is this the thing you gave my husband?
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